SFI-Chapter 6

8/7/2019 SFI-Chapter 6

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Chapter 6

Corporate Level & International

Strategy


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Corporate Strategy

The current strategy of TATA Motors can bebest summarized as Disruptive Innovation.

Tata Nano has taken the world with awe.

The strategy & learnings have gone a long way

with TATA Motors earning net profit of morethan 1000 crores, even during the leanfinancial year of 2008-09 too.

It focused on domestic & international growththrough new products & improved sales &services.

Cost reduction Initiatives.


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Diversification

TATA MOTORS follows related diversification as it provides a wide range of vehiclesfor differentcustomer segments. It has launched various models according to the emerging demands in thedemands.

The chronology is as follows

y 1977 First CV (commercial vehicle) from Pune plant.

y 1983 First HCV (heavy commercial vehicle) rolled out.y 1986 First LCV (light commercial vehicle) (Tata 407) launched followed by Tata 608.

y 1991 First passenger car Tata Sierra launched.

y 1992 Tata Estate launched.

y 1994 Launch of Tata Sumo.

y 1995 Mercedes Benz car E220 launched

y 1997 Tata Sierra Turbo launched.

y1998 Indias first SUV launched.

y 1998 Indias first indigenous Passenger Car Indica launched.

y 2001 Second Generation Indica v2 launched.

y 2008 Launch of Suma Grande

y 2008 Launch of Nano at ninth Auto Expo


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Cont..

Global context it caters to three main market segments: Passenger cars, utilityvehicles and commercial vehicles.

They followed the strategy of acquisition and joint ventures in its mid-stage andlaunched new products at a rapid pace in different market segments.

Tata Motors has operations in the UK, South Korea, Thailand and Spain.

In 2004, it acquired the Daewoo Commercial Vehicles Company, South Korea'ssecond largest truck maker.

Tata Motors is also expanding its international footprint, established through exportssince 1961. company's commercial and passenger vehicles are already beingmarketed in several countries in Europe, Africa, the Middle East, South East Asia,

South Asia and South America. In 2005, Tata Motors acquired a 21% stake in Hispano Carrocera, a reputed Spanish

bus and coach manufacturer, giving it controlling rights of the company.

Tata Motors has expanded its production and assembly operations to several othercountries including South Korea, Thailand, South Africa and Argentina and is planningto set up plants in Turkey, Indonesia and Eastern Europe


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Product/Market Diversification

On Tata's journey to make an international foot print, it continued itsexpansion through the introduction of new products into the marketrange of buses (Starbus & Globus) as well as trucks (Novus)

These models were jointly developed with its subsidiaries TataDaewoo and Hispano Carrocera.

In 2006, it formed a joint venture with the Brazil-based Marcopolo, aglobal leader in bodybuilding for buses and coaches to manufacturefully-built buses and coaches for India and select internationalmarkets.


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Products of TATA Motors


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COMM RCIAL V HICL S

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TATA 407

TROOP CARRIER

LSV


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TATA MOTORS - bcg matrix

The BCG matrix method is based on the product life cycle theory that can be used todetermine what priorities should be given in the product portfolio of a business unit. Toensure long-term value creation, a company should have a portfolio of products that containsboth high-growth products in need of cash inputs and low-growth products that generate alot of cash. It has 2 dimensions: market share and market growth. The basic idea behind it isthat the bigger the market share a product has or the faster the product's market grows thebetter it is for the company.

The bcg of Tata motor is as follows

The top products of tata motors

1.Stars- TML Passenger vehicle segment, LCV(TATA Ace)

2. question mark - NANO,JLR ( New inventions)

3. cash cows - HCV and LCV

4. dogs - ********


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STRAT GY ANALYSIS

INT GRATION STRAT GI SYEAR ACQUIRED COMPANY COUNTRY STAKE ACQUIRED VALUE

1993 Cummins ngine co.

2004

Daewoo CommercialVehicle Company Korea1

00 per cent(wholly-owned)

KRW120 billion

($102 million /Rs465 crore)

2005 Tata Finance India Merger

2005Hispano Carrocera Spain 21 per cent

Euro12 million(Rs70 crore)

2008 Jaguar and LandRover brands

UK $2.3 billion(approximately)

2009 Hispano CarroceraSA

SpainRemaining 79per cent


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DIV RSIFICATION & XPANSION

STRAT GI S

TATA MOTORS

TRUCKS

PASSENGER CARS

UTILITY CARS

DEFENCE CARS

COMMERCIAL PASSENGER CARRIER

LUXURY CARS


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DIFF R NTIATION STRAT GY

TATA Motors are manufacturing Roverbranded TATA Indicas offering Luxury cars toIndian Market.

TATA Motors Vehicles meet Internationalnorms like URO III mission for passenger car

and URO II for LCVs.

uropean Standards for frontal and side safety

impact for passenger cars.

Offer a wide range of product line and thecheapest car of the world--- TATA NANO.


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T CHNOLOGICAL R SOURC S:

R&D establishments at Jamshedpur, pune and lucknow over1400 engineers.

Indias only certified crash test facility for cars and hemi anechoicchamber for testing of noise and vibration.

Tata Motors uropean Technical Centre (TM TC) set up in 2005primarily involved in design engineering and development ofproducts, supporting Tata Motors skill sets.

Tata Daewoo commercial vehicles has its R& D IN Gunsan, SouthKorea.

Value Creation Activities by Corporate

Parent


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Value Creation Activities by Corporate

Parent Sound leadership : JRD, Sumant Moolgaokar, Ratan

Tata.

thical business practices: guided by the tata code ofconduct.

Successful handling of integration issues:

Tata Daewoo, Jaguar and Land Rover.

Reputation and recognition: Tata brand.

CSR initiatives.

Adaptability to the changing business dynamics.


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Ansoff Matrix

xisting Product New Product

xisting

Market

y Market Penetration

y Faster and reliable customer

service to build stronger

relationships with thecustomers.

y Providing free services for

certain period of time.

y Product Development

y Planning to introduce more

inexpensive cars (by launching more

inexpensive cars in the Indian marketthey can create a monopoly in the

low-end markets because no

competitors has an ability to offer

such high quality at low price).

New

Market

y Market development

y Mergers & acquisitions with

international companies in

new potential markets.

y Celebrity endorsements

y Diversification

y By Producing the hybrid cars in

urope and Africa has a promising

future due to the increased

environmental awareness.

y ntering uropean markets with

small cars and high fuel efficiency


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International Strategy based on

competitive advantage

New Product (e.g. Tata Nano, the cheapest car inthe world)

Acquisitions (e.g. Land Rover & Jaguar brands

from Ford Motors) Partnership with established companies (eg.Alliance with Fiat since 2006) to enhance theproduct portfolio & knowledge exchange.

Facilities for learning from other companies Developing programmes for intensivemanagement development.


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Parenting & Synergies (2+2=5)

To buy premium vehicle brands such as LandRover & Jaquar bolster Tata Motors image asa global company & increase its global reach &

scale. Overall, the TATA group has spent around

$15.5 billion in acquiring foreign companies.

Leveraging the unique asset of trust which ithas created to enhance group synergy &become globally competitive.


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Synergy developed as a result of the strengthsof domestic & foreign market share,

congregating under the umbrella of Tata

Group.

The TATA group has a whole operating in morethan 80 countries worldwide share with its

various SBUs, lots of experience & researchfor development purposes.

Parenting & Synergies (2+2=5)


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Corporate Advantage From Diversified Business

SFI-Chapter 6

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